Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Tuesday, June 21, 2016

Article on Retirement Savers & the Prudent Investor Rule

Financial advisorMax M. Schanzenbach & Robert H. Sitkoff recently published an Article entitled, Fiduciary Financial Advice to Retirement Savers: Don’t Overlook the Prudent Investor Rule, Harvard John M. Olin Center for Law, Economics, and Business, Discussion Paper No. 867 (2016). Provided below is an abstract of the Article:

Americans now hold trillions of dollars in individual retirement savings accounts, raising concerns about conflicts of interest among financial advisers who provide advice to retirement savers. Prompted by these concerns, in April 2016 the Department of Labor promulgated a rule that imposes on financial advisers to retirement savers “fiduciary” status under the Employee Retirement Income Security Act. The Department reasoned that the fiduciary duty of loyalty would protect retirement savers from conflicted investment advice. But in addition to a duty of loyalty, fiduciary status also imposes a duty of care. With respect to investment management, the fiduciary standard of care is governed by the “prudent investor rule,” which is grounded in modern portfolio theory and requires an overall investment strategy having risk and return objectives reasonably suited to the purpose of the investment account. This essay calls attention to the regulatory imposition of the prudent investor rule on financial advisers to retirement savers. The essay also canvasses the basic tenets of the prudent investor rule, highlighting its nature as principles-based rather than prescriptive, and the customary role of an investment policy statement in compliance by professional fiduciaries.

June 21, 2016 in Articles, Estate Planning - Generally, Professional Responsibility | Permalink | Comments (0)

Monday, June 13, 2016

Customer Due Diligence Requirements for Financial Institutions

Due diligence requirementsDepartment of the Treasury, Customer Due Diligence Requirements for Financial Institutions, AGENCY: Financial Crimes Enforcement Network (FinCEN), Treasury. ACTION: Final rules. Provided below is a summary:

FinCEN is issuing final rules under the Bank Secrecy Act to clarify and strengthen customer due diligence requirements for: Banks; brokers or dealers in securities; mutual funds; and futures commission merchants and introducing brokers in commodities. The rules contain explicit customer due diligence requirements and include a new requirement to identify and verify the identity of beneficial owners of legal entity customers, subject to certain exclusions and exemptions.

June 13, 2016 in Current Events, Professional Responsibility | Permalink | Comments (0)

Sunday, June 5, 2016

Article on Representing People Subject to Guardianship

GuardianshipNina A. Kohn & Catheryn Koss recently published an Article entitled, Lawyers for Legal Ghosts: The Legality and Ethics of Representing Persons Subject to Guardianship, 91 Washington L. Rev. (2016). Provided below is an abstract of the Article:

A person subject to guardianship has been judicially determined to lack legal capacity. Stripped of legal personhood, the individual becomes a ward of the state and his or her decisions are delegated to a guardian. If the guardian abuses that power or the guardianship has been wrongly imposed — as research suggests is not infrequently the case — the person subject to guardianship may rightly wish to mount a legal challenge. However, effectively doing so requires the assistance of an attorney, and persons subject to guardianship typically have not only been declared by a court to be incapable of directing their own affairs but have been stripped of the capacity to contract. As a result, those who wish to challenge the terms and conditions of their guardianship, or even merely to exercise unrelated retained rights, can be stymied because attorneys are unwilling to accept representation for fear that it is unlawful or unethical. Drawing on constitutional law, as well as the law of agency and contract, this Article shows why such representations are, contrary to the assumptions of many attorneys, not merely legally permissible but essential to protect fundamental constitutional rights. It then explores the professional rules governing attorney conduct in order to show how attorneys may ethically represent persons subject to guardianship. Finally, it proposes a modest change to the Model Rules of Professional Conduct to clarify attorneys’ duties in this context.

June 5, 2016 in Articles, Guardianship, Professional Responsibility | Permalink | Comments (0)

Thursday, May 19, 2016

How The New Fiduciary Rule Will Impact Accountants

Business_expenseThe new fiduciary rules have recently been issued by the United States Department of Labor.  These new rules will have a major impact on people who give investment advice to individual Retirement Account owners.  There are many pitfalls that IRA advisers will have to watch out for when giving advice to IRA holders.  This article discusses many of those pitfalls and the steps that IRA advisers can take to avoid violating the new fiduciary rules.  Financial advisers and accountants are going to need to update their practices to conform to the new federal regulations.  The new fiduciary rules are sending shocks across the estate planning industry and estate planners will need to stay ahead of these major changes. 

See Seymour Goldberg, What Accountants Should Know about the New Fiduciary Rule, Accounting Today, May 18, 2016.

May 19, 2016 in Current Affairs, Estate Planning - Generally, Professional Responsibility | Permalink | Comments (0)

Friday, May 13, 2016

Marketing Strategies People Should Adopt

MarketersProfessionals who are involved with estate planning often have to engage in the difficult process of marketing themselves to potential clients.  This article discusses some of the techniques that can be used to create an effective marketing strategy.  One of the most important things to consider when creating a marketing strategy is what type of clients or markets you are going to target.  It is also important to inform the potential clients you are marketing to about the type of experience your firm has to offer.  Estate planners can build strong professional relationships with their clients by educating them.  Incorporating different delivery methods is also an important marketing strategy.  Finally, it is important for marketing ads to have great graphics and designs to attract customers and stand out from competitors. 

See Craig R. Hersch, The Silver Bullet, Wealth Management, May 11, 2016.

Special thanks to Jim Hillhouse for bringing this article to my attention.

May 13, 2016 in Estate Planning - Generally, Professional Responsibility, Web/Tech | Permalink | Comments (0)

Saturday, May 7, 2016

Alabama Supreme Court Chief Justice Suspended Over Same-Sex Marriage Stance

Roy mooreThe Chief Justice of Alabama’s supreme court has been suspended for his stance on same-sex marriage.  “An Alabama judicial oversight body on Friday filed a formal complaint against Roy S. Moore, the chief justice of the state’s Supreme Court, charging that he had “flagrantly disregarded and abused his authority” in ordering the state’s probate judges to refuse applications for marriage licenses by same-sex couples.”  The State Supreme Court Justice is facing a hearing before Alabama’s Court of the Judiciary which is “a panel of judges, lawyers and other appointees.”  One possible outcome of the hearing could be his removal from office.  Moore was in the news last spring when he ordered probate judges to disobey the law by refusing to issue marriage licenses to same-sex couples. 

See Campbell Robertson, Roy Moore, Alabama Judge, Suspended Over Gay Marriage Stance, The New York Times, May 6, 2016.

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.

May 7, 2016 in Current Affairs, Estate Planning - Generally, Professional Responsibility | Permalink | Comments (0)

Thursday, April 28, 2016

The Importance Of Beneficiary Relationships In Estate Planning

TrustsOne difficult situation that a financial adviser might face is watching a client pass away and then seeing the beneficiaries of the estate undo years of financial planning.  This article discusses why it is important for advisers to establish relationships with their client’s beneficiaries.  Estate planning involves more than just the transfer of money or management of assets.  It involves personal connections with clients and beneficiaries.  In this column the author recounts his own experience with losing an account after a client passed away.  He discusses some of the changes he made to the way he does business after his experience with losing business.  Building relationships with beneficiaries is a good way to promote the long term success of an adviser. 

See Scott Huff, Rethinking Estate Planning as Building Beneficiary Relationships, Wealth Management, April 27, 2016.

April 28, 2016 in Estate Planning - Generally, Professional Responsibility, Trusts | Permalink | Comments (0)

Tuesday, April 19, 2016

How Pass-Through Entities And IRS Form 8971 Impact CPAs

Business_expenseThere are many CPAs who get involved with estate planning for clients who have interests in one or more limited liability companies (LLCs).  This article discusses many of the things that CPAs should know when they get involved with helping clients who have LLCs.  It explains some of the real-world problems that often come up with LLC operating agreements.  Oftentimes there are mistakes with the titling of assets, which can be bad news for clients who have creditor rights problems.  This article also goes into discussing the new IRS disclosure rules as they relate to Form 8971 and when it must be filed with the IRS.  CPAs need to be aware of this information and how it will impact their practice.  Staying informed about the new regulations will help CPAs better protect their client’s interests and avoid getting in trouble.

See Seymour Goldberg, What CPAs Should Know about Pass-Through Entities and IRS Form 8971, Accounting Today, April 15, 2016.

Special thanks to Seymour Goldberg (Goldberg & Goldberg, P.C.) for bringing this article to my attention.

April 19, 2016 in Estate Planning - Generally, Income Tax, Professional Responsibility, Trusts | Permalink | Comments (0)

Tuesday, April 12, 2016

Hiding Something? Don't Let Your Kids Post Pictures Of It Online

HanduffsOne of the biggest news stories in the last year was the story of Ethan Couch, the son of a millionaire who claimed being from an affluent family that set no rules lead to his fatal car crash. When faced with a probation violation, he fled to Mexico but was later caught after using his cell phone to order a pizza in a stunning example of someone having no clue about how digital actions can easily be monitored. And he is not the only rich kid with that problem. A growing number of parents are being called out for their own misdeeds, particularly fraud and tax evasion, after their children post pictures and comments on social network sites. One fraudster was caught after his adult son posted a picture of the two standing in front of a private plan despite the fact he had stated he was broke. And it's not just the affluent unknowns making this mistake, rapper 50 Cent faced tough questions from a bankruptcy court after posing with stacks of $100 bills spelling out the work "broke" in a Facebook post. What everyone needs to remember in the digital age is that nothing you post online will stay hidden, or forgotten, for long.

See Sarah Knapton, Super-rich caught out by children’s Instagram accounts, The Telegraph, April 3, 2016.

Special thanks to Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.

April 12, 2016 in Current Affairs, Professional Responsibility | Permalink | Comments (0)

Friday, April 8, 2016

Law Firms And Lawyers Need To Adapt To Changing Technology

Legal technologyThis column discusses an article that was written by Elaine Mcardle discussing the need for law firms, lawyers, and recent graduates to adapt to changing technology.  Lawyers are facing increasing digitization and outsourcing, which is analogous to the situation of taxi drivers being replaced by Uber.  Legal professionals will need to figure out how to adapt to this changing reality.  This article discusses some of the programs that are in place to help guide legal professionals through these rapid changes in technology.  “A program recently created by Michele DeStefano of the University of Miami Law called LawWithoutWalls is meant to foster innovation in the legal profession.”  Attorneys who want to adapt and stay ahead should stay informed about the constant changes in legal technology. 

See Pooja Shivaprasad, The Laws of Adaptation, Wealth Strategies Journal, April 1, 2016.

Special thanks to Jim Hillhouse for bringing this article to my attention.

April 8, 2016 in Estate Planning - Generally, Professional Responsibility, Technology, Web/Tech | Permalink | Comments (0)